China sets deadline for dealing with “zombie” firms

Beijing has handed local governments and state asset management departments a three-month deadline to submit a list of debt-laden, loss-making “zombie” companies that need to be dealt with, Caixin reports.

Corporate debt is one of the largest risks facing the Chinese economy, with state-owned enterprises having amassed a staggering Rmb 113.9 trillion ($16.5 trillion) in debt as of October, an increase of 7.7% year-on-year.

Eleven central government agencies jointly released a plan for dealing with these “zombie” firms Tuesday. Officials will first need to identify the firms that need to be dealt with within three months, and then those companies will have to be restructured or disposed of by 2020.

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About China Economic Review

China Economic Review (CER) has been a dependably independent voice on trends and developments in the greater Chinese economy for a quarter century. Our coverage has won recognition from the Society of Publishers in Asia and is widely read by economists, business leaders, academics and students with an interest in one of the world’s most vibrant and complex developing markets.